MBS Live Recap: Underlying Stock/Bond Correction Still The Driving Force

While we can point to tonight's election results on the calendar, and imagine that they'll have an impact on financial markets, stocks and bonds simply continued doing what they've been doing since October 28th.  That's when stocks and bond yields bottomed out in a move that was driven exclusively by heavy selling in stocks.

Since then, they've been bouncing back slowly but surely.  Friday's NFP reaction threw a bit of a wrench in the works as neither stocks nor bonds appreciated the implication of faster/more Fed rate hikes.  There was a bit of healing yesterday as both sides of the market rallied.  Today, however, it was back to the same old business of rates and stocks moving in the same direction.  Today, that direction happened to be higher.

It remains to be seen just how much of an impact the midterm election results will have, but without a shadow of a doubt, the range of potential impacts is somewhere between "none" and "some."  Noticeably absent from that list is "a ton," but stranger things have happened.  Still, I think if we see a ton of reaction it will have more to do with the technical levels that the election could cause either side of the market to cross.  Both seem to be waiting for any sort of sign before making a bigger move back to early October levels.